What constitutes an asset?

An asset is defined as a resource that has economic value and is owned by an individual or a business. This means that assets can potentially provide future benefits or generate cash flow. For example, cash, real estate, equipment, and investments all qualify as assets because they contribute to a person’s or entity's wealth and can be converted into cash or used to generate income.

The other options do not represent what constitutes an asset. Financial liabilities refer to what is owed and do not have positive economic value; instead, they represent obligations. Income generated from investments is a potential benefit derived from assets, but it does not itself constitute an asset. Finally, the value of services provided to customers reflects a business's activities but is not classified as an asset; rather, it pertains to operational performance. Thus, the correct understanding hinges on recognizing that an asset is fundamentally about ownership and the potential for economic benefit.